U.S. National Security Budgets in Context
Cindy Williams
Principal Research Scientist
MIT Security Studies Program
September 2010
1
Overview of Discussion
• U.S. budget for national defense
• National defense budget in perspective
• Total U.S. federal budgets for security and
foreign affairs
• Economic and fiscal pressures on future
budgets for national defense
– The recent recession
– Longer-term federal fiscal pressures
MIT Security Studies Program
September 2010
2
National Defense Budget
Budget Authority in Billions of Current Dollars
Budget Function
FY 10 FY 11
request
051 Department of Defense
non-war
war
534
163
553
159
053 DOE Atomic Energy
18
19
054 Other Departments’
Defense-Related
050 Total National Defense
7
8
722
739
MIT Security Studies Program
September 2010
3
U.S. National Defense Spending
in Perspective
Fiscal Year 2011, including cost of wars
• Nearly half of total world defense spending
• 19 percent of federal outlays
• 53 percent of federal discretionary outlays (annual
appropriations)
• 4.9 percent of gross domestic product (GDP)
• Excluding the costs of wars, about 50 percent higher in
real terms than in 2000
• Including the costs of wars, about 90 percent higher in
real terms than in 2000
• Higher in real dollar terms than at any time since World
War II
• Significantly lower as a share of GDP than Cold War
average
MIT Security Studies Program
September 2010
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Federal Outlays for FY 2011
Total $3.8 Trillion
Interest
Non-defense discretionary
Other mandatory
Medicaid
Medicare
National defense
Social Security
Image by MIT OpenCourseWare.
MIT Security Studies Program
September 2010
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U.S. Outlays for National Defense
(Billions of Constant FY 2011 Dollars)
1000
900
800
700
600
500
400
300
200
100
0
1940
1950
1960
1970
1980
1990
2000
2010
Fiscal Year
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September 2010
6
U.S. Outlays for National Defense
(Share of GDP)
40
35
Percent
30
25
20
15
10
5
0
1940
1950
1960
1970
1980
MIT Security Studies Program
September 2010
1990
2000
2010
7
Budgets for Security and Foreign Affairs
Budget Authority in Billions of Current Dollars
FY 2001
FY 2010
Estimate
FY 2011
Request
National Defense
Excluding Iraq and Afghanistan
Iraq and Afghanistan
Total National Defense
318
0
318
559
163
722
580
159
739
Homeland Security
Total Homeland Security
HS Spending in DoD
Homeland Security Net of DoD
17
4
13
71
19
52
73
19
53
International Affairs
20
67
65
Total
351
841
857
MIT Security Studies Program
September 2010
8
U.S. National Security Budgets
• In nominal terms (without adjusting for inflation),
total national security budgets are nearly 2.5
times higher today than in 2001
• In real terms, they are about 90 percent higher
than in 2001
• Excluding war costs, national security budgets
are nearly 60 percent higher in real terms than in
2001
• Homeland security saw the largest percentage
rise in spending
• US spends more than ten times as much on
military as on homeland security or on
nonmilitary instruments of foreign policy
MIT Security Studies Program
September 2010
9
Federal fiscal picture exerts downward pressure on defense
• Fiscal costs of recent recession
– Bank bailouts, stimulus, unemployment
compensation
– Lower revenues
• Large federal deficits and growing debt
• Rising cost of federal entitlement programs, especially health care
• Retirement of baby boomers on the
horizon
MIT Security Studies Program
September 2010
10
Federal Outlays
Share of GDP
25.0
Interest
Percent
20.0
15.0
Mandatory
10.0
Non-Defense
5.0
0.0
1962
Defense
1967
1972
1977
1982
1987
1992
MIT Security Studies Program
September 2010
1997
2002
2007
11
U.S. Federal Surplus (+) or Deficit (-)
As Share of GDP
4
2
Percent
0
-2
-4
-6
-8
-10
-12
1950
1960
Source: OMB, CBO
1970
1980
1990
2000
2010
2020
Fiscal Year
MIT Security Studies Program September 2010
12
U.S. Federal Debt (Share of GDP)
90
80
Percent
70
60
50
40
30
20
10
0
1950
1960
Source: OMB, CBO
1970
1980
1990
2000
2010
2020
Fiscal Year
MIT Security Studies Program
September 2010
13
14
15
Measures to avert unsustainable level of federal debt
• Increase revenues above projections
• Rein in entitlement spending
• Rein in discretionary spending
Probably a combination of the three
Will surely include reductions in defense as
share of GDP, probably in real terms as
well
MIT Security Studies Program
September 2010
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Defense also faces cost pressure
from the inside
• Future costs of wars
• Military & civilian pay raises above inflation
• Rising costs of health care for military and
civilians employees
• Rising costs of weapon systems
• Rising operating & maintenance costs for
aging and new weapon systems
MIT Security Studies Program September 2010
17
President’s Plan for DoD
Discretionary Budget Authority, Current $ Billions
Fiscal Year
Non-war
War
Total
2009
513
146
667
2010
531
163
693
2011
549
159
708
2012
566
50
616
2013
582
50
632
2014
598
50
648
2015
616
50
666
MIT Security Studies Program
September 2010
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What do the fiscal pressures portend for the US military?
• Cancellation of systems with weak performance
or big cost and schedule overruns
• Stretch-outs of equipment modernization
programs
• Belt-tightening concurrent with drawdown of
forces in Iraq and Afghanistan?
• Reductions in size of force?
• Changes in allocation of budgets among the
services?
MIT Security Studies Program
September 2010
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Backup Charts
MIT Security Studies Program
September 2010
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21
22
23
24
25
MIT OpenCourseWare
http://ocw.mit.edu
17.953 U.S. Budgets for National Security
Fall 2010
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